It’s three o’clock in the afternoon on Easter, and I’m standing on a wooden deck in the Corona Heights neighborhood of San Francisco, looking out toward Nob Hill. A man is cooking large slabs of meat on a gas grill as two dozen people mingle with glasses of bourbon and bottles of beer in the cool, damp breeze blowing in off the ocean. All of these people are would-be movers and shakers in American higher education—the historic, world-leading system that constitutes one of this country’s greatest economic assets—but not one of them is an academic. They’re all tech entrepreneurs. Or, as the local vernacular has it, hackers.

Some of them are the kinds of hackers a college dean could love: folks who have come up with ingenious but polite ways to make campus life work better. Standing over there by the case of Jim Beam, for instance, are the founders of OneSchool, a mobile app that helps students navigate college by offering campus maps, course schedules, phone directories, and the like in one interface. The founders are all computer science majors who dropped out of Penn State last semester. I ask the skinniest and geekiest among them how he joined the company. He was first recruited last spring, he says, when his National Merit Scholarship profile mentioned that he likes to design iPhone apps in his spare time. He’s nineteen years old.

But many of the people here are engaged in business pursuits far more revolutionary in their intentions. That preppy-looking guy near the barbecue? He’s launching a company called Degreed, which aims to upend the traditional monopoly that colleges and universities hold over the minting of professional credentials; he wants to use publicly available data like academic rank and grade inflation to standardize the comparative value of different college degrees, then allow people to add information about what they’ve learned outside of college to their baseline degree “score.” It’s the kind of idea that could end up fizzling out before anyone’s really heard of it, or could, just maybe, have huge consequences for the market in credentials. And that woman standing by the tree? She’s the recent graduate of Columbia University who works for a company called Kno, which is aiming to upset the $8 billion textbook industry with cheaper, better, electronic textbooks delivered through tablet computers. And then there’s the guy standing to her right wearing a black fleece zip-up jacket: five days ago, he announced the creation of the Minerva Project, the “first new elite American university in over a century.”

Last August, Marc Andreessen, the man whose Netscape Web browser ignited the original dot-com boom and who is now one of Silicon Valley’s most influential venture capitalists, wrote a much-discussed op-ed in the Wall Street Journal. His argument was that “software is eating the world.” At a time of low start-up costs and broadly distributed Internet access that allows for massive economies of scale, software has reached a tipping point that will allow it to disrupt industry after industry, in a dynamic epitomized by the recent collapse of Borders under the giant foot of Amazon. And the next industries up for wholesale transformation by software, Andreessen wrote, are health care and education. That, at least, is where he’s aiming his venture money. And where Andreessen goes, others follow. According to the National Venture Capital Association, investment in education technology companies increased from less than $100 million in 2007 to nearly $400 million last year. For the huge generator of innovation, technology, and wealth that is Silicon Valley, higher education is a particularly fat target right now.

This hype has happened before, of course. Back in the 1990s, when Andreessen made his first millions, many people confidently predicted that the Internet would render brick-and-mortar universities obsolete. It hasn’t happened yet, in part because colleges are a lot more complicated than retail bookstores. Higher education is a publicly subsidized, heavily regulated, culturally entrenched sector that has stubbornly resisted digital rationalization. But the defenders of the ivy-covered walls have never been more nervous about the Internet threat. In June, a panicked board of directors at the University of Virginia fired (and, after widespread outcry, rehired) their president, in part because they worried she was too slow to move Thomas Jefferson’s university into the digital world.

The ongoing carnage in the newspaper industry provides an object lesson of what can happen when a long-established, information-focused industry’s business model is challenged by low-price competitors online. The disruptive power of information technology may be our best hope for curing the chronic college cost disease that is driving a growing number of students into ruinous debt or out of higher education altogether. It may also be an existential threat to institutions that have long played a crucial role in American life.

I’m here at this party and in the Bay Area for the next few days to observe the habits, folkways, and codes of the barbarians at the gate—to see how close they’ve come toward finding business models and technologies that could wreak such havoc on higher education. My guide, and my host at this party—he organized the event for my benefit—is a man named Michael Staton. With sandy-blond hair, blue eyes, and a sunburned complexion, Michael is thirty-one—old by start-up standards—and recently married. He’s the president and “chief evangelist” of Inigral, a company he created five years ago to build college-branded social networks for incoming undergraduates. But just as importantly for my purposes, he’s also one of those people who has a knack for connecting with others, a high-link node in a growing network of education technology entrepreneurs who have set their sights on the mammoth higher education industry.

One of the bedrooms in the house where we’re mingling and drinking was Inigral’s headquarters for the first eight months of its existence, back when the founders were “bootstrapping” the company, which is valleyspeak for growing the business on their own using credit cards, waitering tips, plasma donation proceeds, and other sources that don’t involve the investment dollars that can shoot a start-up toward fame and fortune at the price of diluting the founder’s ownership and control. The longer someone can manage to feed themselves with ramen noodles and keep things going via bootstrapping, the more of their company they’ll ultimately get to keep—unless someone else comes up with the same idea, takes the venture capital (VC) money earlier, and uses it to blow them to smithereens. The start-up culture is full of such tough decisions about money, timing, and power, which are, in their own way, just as complicated and risky as the task of building new businesses that will delight the world and disrupt a trillion-dollar market.

Feed the Political Animal

Comments

What a wonderful article-it put a huge smile on my face reading it. Lots of great ideas and wonderful innovation happening it in a space that needs it. I hope you do a follow-up in a year on it.

Atul Kumthekar on August 28, 2012 10:52 PM:

I think for a true pursuer of knowledge, all the western education seems meaningless at a point. Albeit it may be giving good platform to connect. It may be good to look also at how Indian Classical Music is taught (traditionally) in India. Even in science we see a good bond between a student and a teacher which is most critical. This may not be possible in online education. One can even go back to Archimedes days and see how he used to teach walking around - he must be doing his own thinking while teaching ! All n all - it is the freedom, no fear or survival, is the key to good education. Online education definitely provides some goals like education for all, free and whenever student wants. I am doing some online courses on coursera.org and quite satisfied except for the typical exam pattern they implement - probably out of some framework bindings.

Bethany Schwecker on August 29, 2012 12:55 AM:

Thanks for this reporting Kevin.

Like many who have earned their expensive degree from an intellectually respected institution and find that the value of the credential in the real-world of remuneration is far less than the cost it took to acquire it, I'm very glad that future generations have a fighting chance to get out from under these dark clouds--though I am naturally envious that I will not be able to participate in their joy.

I, like Adrian, very much would like to know how forward progress is being made in this arena. Please do a follow-up in a year.

Atul Kumthekar on August 29, 2012 2:51 AM:

Phew... read the entire article and thought may add few more points:

1. Thiels of the world can focus on wankel engine type substitute to IC engines rather than rockets and fuel. That will be more useful to mankind and will go in line with the scale, money, ambition mix !

2. The rail road example and getting obsolete of it may not be really related to open market capitalism but more related to car lobby! If this was not so, possibly we may not have faced global warn(read -m)ing :)

3. There sure exist a world beyond scale, economy and ambition. May be US need to become 1000 year old culture for that! But to think of it, would any venture capitalist have funded Right Brothers? The new things will even today and tomorrow NOT come from out of venture capital world. I like the 18th century Europe scenario in this respect. So many innovations came in math, physics, chemistry not by venture capital mechanism but by sheer desire and efforts in honest way. No fancy American colleges were really required for all that. I think it is about creating the cult and hype of this type. That is what we need. As aptly put by great Indian leader Gandhi - 'there is enough for everyone's need but not enough for greed' :) So one needs to think over as to which world are we talking about when we think about change. Does the trickle down effect really work?

Jeff on August 29, 2012 9:50 AM:

Can I please have a wallpaper-size copy of the article's leading illustration? Right now?

LaFollette Progressive on August 29, 2012 11:07 AM:

It's easy to imagine some very positive changes to the status quo emerging from this new technology -- eliminating the de facto requirement that everyone who wants a halfway decent white collar job must go into debt to earn a traditional four year degree from a name-brand institution, and allowing anyone in the world to take high-quality individually-tailored coursework for career development, while preserving the long-term health of institutions that still provide a traditional four-year liberal arts education to those who actually want one.

It's also easy to imagine this going in a dystopian direction, in which slower-adapting public universities have to be closed or bailed out and reorganized by their states, many smaller private schools disappear off the map, the most prestigious schools start profiteering off of student loan dollars like the worst online schools of the present, the best research faculty stop teaching, and even the most prestigious schools become little more than a series of powerpoint presentations delivered by adjuncts who earn virtually nothing.

Frankly, the latter version seems much more likely, given the current direction of our society.

mbk114 on August 29, 2012 12:08 PM:

A very interesting article, but I'm surprised that never once did I see the names John Sperling, Apollo Group, or University of Phoenix brought up. It's unfortunate, because they offer a glimpse of what this new world of education is likely to look like - a system where most people participating are just simply going through the motions because of the ever-growing need to get that little piece of paper society values so much.

Mr. Carey only partially addresses the key factor here, which is that of the credibility of the degree -- or what he refers to in market-ese as "colleges with strong brand names." On the surface it's easier to get a degree than ever, with UoP and its clones offering technology-assisted education in ways that accommodates the needs of their users, just like many of the people interviewed here are hoping to do (albeit at a lower cost). Yet these institutions suffer from a growing perception that their degrees do not reflect the same degree of intellectual development as those from more traditional institutions of higher learning. Rather, it becomes something like a variation of that old slogan about socialism: the teachers pretend to teach and the students pretend to learn.

This isn't to say that technology, for better and for worse, won't play a growing role in education (and I say worse because technology is a factor driving up the cost of higher ed that nobody is talking about). But that tipping point that Mr. Carey describes at the end of his article is a lot farther off than he thinks unless the smart people of Silicon Valley devote some time to figuring out how to improve the validity of the degrees they would be granting. There already is a way to do this -- it's called accreditation, but it's the type of expensive process that would cancel out many of the cost benefits these people are trying to achieve. Until they figure THIS out, though, they're going to just be creating an e-version of the UoP model, with most of the students they produce ultimately having wasted their time pursuing a chimera sold by some sharp people whose enthusiasm outpaced reality.

Robert Arvanitis on August 29, 2012 6:36 PM:

The essence of teaching is when the one who knows, knows so well he can anticipate where the one who seeks does not understand.

In other words, the teacher must know the most complex subject so well, that they can make it seem simple.

The real leap will occur when predictive analytics are sufficiently sophisticated to replicate that.

frank on August 29, 2012 6:51 PM:

My daughter is 12-this gives me hope...

TTT on August 29, 2012 7:26 PM:

The missing piece is for large tech employers like Google, Apple, Microsoft, etc. to unite and say they will hire, for entry level positions, people who have completed the following 3-course certificate in MITx in the suitable field (computer science, etc.).

When these high-profile employers say that a Bachelor's degree is not needed for entry-level positions, then the last pillar holding up the sordid old edifice, is gone.

So the education that can make you eligible for an entry-level job at Google costs very little, vs...

A degree in 'Women's Studies' that neither opens up jobs nor is cheap.

An easy choice.

Paul Schantz on August 29, 2012 11:50 PM:

Fantastic article, Kevin! It captures a lot of the internal passion and excitement in the Internet industry that many in higher ed have never been exposed to. It's infectious and perhaps a little frightening for some. Thank you for writing this.

Louise Yarnall on August 30, 2012 3:32 AM:

I agree with the person fearing the dystopian vision, and the person worried that hiring managers will pick the candidates from brand name colleges and personal recommendations rather than on evidence of competence. Disruptive change needs to offer real opportunity to be meaningful. The most interesting aspects of teaching and learning have to do with lesson and assessment design. It would be nice to see more focus on how these new entrepreneurial models teach and how students learn from them. Making that part of the equation more transparent would make a strong contribution toward solving many of the education problems we have: inequity, branding and creaming, impersonalization, poor teacher preparation. One size never fits all, and really, one of the biggest problems today in education is the lack of tools for students and their families to customize learning based on the inherent talents and passions that all young people display. The more we learn about learning, the closer we will get to transforming opportunity for all.

Alan Contreras on August 30, 2012 12:07 PM:

Kevin, you have done a great job with this subject. As someone whose career has been based on evaluating colleges and determining the validity of degrees, I look at the future and see a great deal of complication.

One key factor in moving knowledge from one person to another is the need to rely on the qualifications of the provider. I am concerned that as we move away from a system rooted in the concept of the "faculty," we move into something of a qualitative wilderness in which anyone can slap a label on a training packet and call it knowledge. Some of the for-profits do this already.

This is to some extent self-correcting over time, as the turkeys are seen to bear feathers, but by then a significant amount of harm may be done. It is true that the gatekeeping functions of governments and accreditors are rusty and the processes slow and expensive. However, unless we adopt a purely libertarian view of credentials, under which any employer must conduct significant research into the nature of the providers whose "graduates" are at the door, there needs to be some kind of screening or certifying function for credentials.

I do not think that these new models will have much effect on the bulk of traditional-age undergraduates. They will continue to want to go to physical colleges because that is where they find mates and make friends. The issue is whether they will be able to afford it.

The era of subsidized public colleges is clearly over and won't be seen again, so the question is how to support student attendance at physical campuses. The only plausible answer is that colleges that succeed in generating private support will survive and many others will not.

I'm sorry to see that so many wealthy entrepreneurs do not see more value in reducing the cost of traditional education rather than replacing it with something else. The new models will work well for some students, but not for many.

Alan Contreras
Oregon

William Senft on August 31, 2012 12:15 PM:

When you boil it all down, isn't the core problem/opportunity TESTING?

If there are assessments that truly measure knowledge and ability, administered with security and integrity, then those who demonstrate their mastery will deserve to gain access to capital and employment opportunities. The industry winners are those that can provide quality curriculum and assessment and testing security and integrity.

The rest is up to the students - truly a merit based system for advancement that does not depend on playing the admissions game for a brand name university. The revenue model in this new system will involve payment for access to courses and for testing.

Traditional schools will have to focus on providing the experiences that REQUIRE people to be together in the same physical location. The 4 year, 9 months a year, brick and mortar classroom based model for achieving high school and college degrees will not provide the right cost/benefit balance as opposed to some hybrid that will leverage technology to make the educational experience much more flexible and efficient. There are many complexities, like the simple fact that much of secondary school education essentially is daycare for older children that is needed by working parents, but one thing is for sure, the cost of education should trend inexorably downward going forward. That's a good thing.

Thanks for this thought provoking article.

Virginia on September 01, 2012 6:34 PM:

Great article, enough to frighten a lot of universities. But oddly enough perhaps not professors, who I would think are in a weak position.

I would second the comment about trying to reform traditional universities instead of disrupting them.They aren't making big bucks, as the article implies, at least not the public universities. I wish some venture capital would go towards streamlining the existing system to make it more efficient.

I think the real challenge to colleges is the globalization of education, not just its online nature. And it will be people in other countries who make the most of it. American college students still resist online learning, don't like eTextbooks, and are skeptical about classroom tech.

Is anyone figuring out the advising part of this? Most students don't know which courses they should take, which ones go together, what to specialize in, how to make a program that makes sense. And they also don't necessarily know how to learn. Universities put a lot of effort into advising.

Finally, I would be sad to see higher education become so narrowly focused on jobs and not intellectual development. Yes, that's easy to say when you have a job. But many people remember college as a time of intellectual experimentation and growth, not just learning technical skills. The new forms of education could also provide this--but I don't see anyone talking that way, at least not in this article.

Thanks for a thought provoking article.

Lukas W on September 04, 2012 9:32 PM:

Just wanted to say I love the article. Lots of food for thought. About credentials, power structures, education, technology, and the "thing" that is start-ups.

Thanks so much.

Kevin F. Adler on September 05, 2012 12:23 PM:

The basic philosophical divide that Nick proposes is compelling, but I find it dubious in practice. Relationships form the bedrock of Silicon Valley, and dictate the flow of money. Is the entrepreneur a known entity? Are other investor friends investing? Broad category plays can only be so broad. Talent, while scarce, is still incredibly rich and distributed across startups concentrated in the Valley. While some philosophical underpinnings guide general investment flow, ties from college, prior employment, and friend networks dictate where the money goes.

The basic philosophical divide that Nick proposes is compelling, but I find it dubious in practice. Relationships form the bedrock of Silicon Valley, and dictate the money.

Is the entrepreneur a known entity? Are other investor friends investing? Broad category plays can only be so broad. Talent, while scarce, is still incredibly rich and distributed across startups concentrated in the Valley. While some philosophical underpinnings guide general investment flow, ties from college, prior employment, and friend networks dictate where the money goes.

Fascinating article! Really enjoyed it and I'm excited for some upcoming disruption!

John Beck on September 07, 2012 11:11 AM:

Based on some of the other comments, this article seems to inspire hope in a lot of the people who read it. I'm not sure why, and I'm sort of scratching my head about the "golly gee" tone of the article and some of its premises. Has Carey suddenly transformed into Dr. Pangloss? For starters, he writes glowingly of Wal-Mart; Wal-Mart has indeed brought us cheap prices for clothes and other products, its great "gift." The downside? Many of these products are produced by people working at what reasonably could be called slave labor wages in impoverished countries. Then there's the 1000s of small stores across the country run out of business by Wal-Mart and Wal-Mart's other great "gift" to the American people: the expansion of the low wage, no benefit employment sector. To "Wal-Martize" higher education even further than it has been through technology (the process has been well under way for decades with the growing use of adjuncts) will do in yet another employment sector that pays reasonably well. Don't expect these tech start-ups to create new kinds of jobs en mass to replace the jobs lost in higher ed; Carey (and research supports this) makes clear these companies aren't going to be major employers.

Mr. Carey is implicitly making the case that these entrepreneurs will solve the problem of rising tuitions and limited access to higher education. It's a curious argument for him to make because it's so narrowly focused. In this article, the education world seems to consist solely of expensive elite universities jealously keeping their enrollments small and thus closing out a multitude of top students across the country (and world) who apparently can't get a decent education elsewhere. The community college sector (ironically, Carey's specialty)is totally invisible in this article not to mention the hundreds and hundreds of public universities that provide a solid education--even an excellent education to those who seek it--at tuition levels that still generally don't leave graduates with tens of thousands of dollars of debts.

The entrepreneurs Carey is describing are primarily interested in doing what interests them and in making money. They don't care if they devastate an industry whether it's the recording industry, publishing or higher education. We may not care either, but if the digitalization of publishing reduces the already minuscule compensation authors earn even more, that may very well result in less quality published work, not more, and maybe that's a problem. As for the implicit message in this article that colleges and universities are slow to take advantage of the new technology, maybe so, but most have been moving online for more than a decade now. What these entrepreneurs hope to do is cut the colleges and universities out of this market and make some money. Educators--at least the principled ones--hold values that limit how far they are willing to go in changing higher education. These entrepreneurs apparently don't adhere to these values; for them, instruction is a commodity, nothing more, nothing less. Why have 1000s of teachers giving a lecture about the Declaration of Independence when one good lecture by a professor at an "elite" university will do? Hire paper graders and discussion facilitators (low paid of course) to do the grunt work and work on software to replace them eventually. Heck, why even have a course that brings up the Declaration of Independence? How does that pay off for someone? And who's going to get this type of education in the brave new world? People who aren't brilliant and people who aren't rich, which is to say, most of us. People who are brilliant and people who are affluent will continue to get the real deal. And what will people do with their online degrees as entrepreneurs work tirelessly to bring "progress" to industry after industry? Wal-Mart beckons.

doug k on September 07, 2012 4:50 PM:

John Beck said most of what I was going to say. Kevin Adler makes the excellent point that college is more about the relationships established, than the education as such.

Also this quote was illuminating:
"one of its executives asks me how much money the United States spends per year to educate a single student in K-12 education. About $15,000, I say. Thatís more than what it costs us per month to host the entire site, serving millions, the executive responds. "

Serving millions, yes, but with what ? flash cards are not an education nor yet a teacher. The glib Panglossians of online education mistake a twig of the tree for an entire woods.

I took one of the Coursera courses. Certainly it's an excellent option for those who have no other access to the material, but it did not appear in any way to be teaching. With thousands of students, the lecturers might as well be reading out chapters of the textbook. Any learning that happened occurred at random in the online forums and chatrooms around the course, not the lecture videos. Online courses are a fine resource for autodidacts but no replacement for teachers.

Jerry on September 19, 2012 1:15 PM:

While I think higher education is ripe for disruption, there is something that the Yales and Stanfords of the world do well, and that is research. Their education delivery is demonstrably poor, but as a society, we need research, and I haven't seen anyone put forth how research gets done without universities. Do you kill research that moves humanity forward if you kill universities?

Mark Goldes on September 29, 2012 1:56 AM:

Back in the 1960's I initiated the Free University movement. According to Time Magazine, 600 experiments materialized worldwide in the following year or two.

What I really meant was that the planet was becoming a university as a result of modern communication. Anyone seriously interested could learn anything with the support of a few friends.

Carey provides an excellent survey of a revolution taking place in education. it may transform our civilization faster than might be imagined.

I plug the article in my bio on the Aesop Institute website. And will expand the mention now that the entire article ia on the web.

Mark Goldes on September 29, 2012 2:00 AM:

Jerry,

While some academic research is magnificent, much of it leaves a great deal to be desired.

Cold Fusion is a wonderful example.

See Cheap Green on the Aesop Institute website to see a little about a monumental energy breakthrough that has been delayed for more than two decades by the failure of academic research.

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